Petro-Democracy

Posted by Cutler on October 27, 2006
Iraq

There are two events that sparked the recent clash between Iraqi Prime Minister Maliki and US Ambassador Zalmay Khalilzad.

The first is a recent round of US raids on Sadr City. As with at least one previous instance, Maliki denied any prior knowledge of the raid, even though Iraqi forces were involved.

The second event is the October 24, 2006 press briefing by Ambassador Khalilzad.

Khalilzad’s remarks are worth a closer look, if only because the Ambassador was unusually candid about several issues:

Iraq is strategically vital, due to its location and resources.

When was the last time anyone in the Bush administration even acknowledged that Iraqi “resources” were a “strategically vital” consideration for the US?

Khalilzad also does a little sabre rattling about Iran and Syria.

Those forces that constitute the extremist’s camp, including not only al Qaeda, but Iran and Syria, are at work to keep us and the Iraqis from succeeding…

The enemies of Iraq — Al Qaida, Iraq’s historic rivals and the local clients — concentrate their efforts on tearing the Iraqi people apart along sectarian lines.

Tragically, these efforts have had an effect. Now the primary source of violence is not simply an insurgency but also sectarian killings involving Al Qaida terrorists, insurgents, militias and death squads. Iran and Syria are providing support to the groups involved.

Khalilzad also reviews US strategy for dealing with the Sunni Arab insurgency:

[Another element in US strategy] is persuading Sunni insurgents to lay down their arms and accept national reconciliation. We are reaching out to Arab states such as Saudi Arabia, the UAE and Jordan to help by encouraging these groups to end the violence and work for a united and independent Iraq, and to work against al Qaeda. These countries have promised to be helpful.

I cannot recall the last time a US official publicly noted that there may be a “regional angle” to the Sunni Arab insurgency, with Saudi Arabia, the UAE, and Jordan in key roles.

Presumably, the portion of the briefing that sparked the clash with Maliki concerned benchmarks and timetables.

We are helping Iraqi leaders to complete a national compact. Key political forces must make difficult decisions in the coming weeks to reach agreements on a number of outstanding issues on which Iraqis differ: enacting an oil law that will share the profits of Iraq’s resources in a way that unites the country – this is of critical importance; amending the constitution to make all Iraqis understand that their children will be guaranteed democratic rights and equality; reforming the De-Baathification Commission to transform it into an accountability and reconciliation program; implementing a plan to address militias and death squads; setting a date for provincial elections; and increasing the credibility and capability of Iraqi forces.

Iraqi leaders have agreed to a timeline for making the hard decisions needed to resolve these issues.

President Talabani has made these commitments public. The United States and its coalition partners will support Prime Minister Maliki and other leaders in their effort to meet these benchmarks.

While most of the talk of “benchmarks” have been suspiciously vague, Khalilzad’s list is relatively specific.

Military Action Against Sadr

During the briefing, there was a question (the transcript on this site identifies the reporter as Ellen Knickmeyer of the Washington Post) about Maliki and militias that anticipates the current impasse:

QUESTION: General Casey has repeatedly said that resolving the militia issue will take a military and political approach, but Prime Minister Maliki has made clear that he doesn’t want any kind of U.S. military action against the militias. He’s said that specifically (inaudible) Sadr City.

So when the question comes to it’s up to the Iraqi government to show resolve against the militias, they’ve already made clear that they’re not going to take a tough approach like the U.S. wants. And Muqtada al-Sadr has already said that his militia is not a militia per se and that he’s not going to disband it.

So absent any kind of military force against these militias and these death squads, who are the main component of violence right now, how are you going to stop the militias?

KHALILZAD: I don’t agree with your characterization.

I believe that the Prime Minister has said to me and to George that he believes in an integrated approach — political, yes. That’s the best approach if you can convince those that control militias to cooperate with the decommissioning, demobilization and integration plan. But he has said he does not rule out the use of force.

And we will see what happens, but I believe right now we are in the phase of developing a plan for how to move forward with a demobilization and decommissioning and reintegration plan. Our people, both from the military and civilian side, are working with a team that has been designated by the Prime Minister to develop such a program.

“We will see what happens.” What seems to have happened, for now, is that Maliki ruled out the use of force. But it ain’t over until its over. So, we will see what happens.

On a Hydrocarbons Law

Khalilzad makes clear that, for the US, the truly “critical” benchmark involves the passage of a new oil law, usually referred to as a hydrocarbons law.

The hydrocarbon law has been at the center of all the talk of a new Iraqi “Compact.”

Back in September 2006, the US and UN sponsored an International Compact for Iraq conference, held in Abu Dhabi.

“The bargain being struck here is economic reform by Iraq in return for financial support,” said U.S. Deputy Treasury Secretary Robert Kimmitt, President George W. Bush’s special envoy on the talks. U.S. Ambassador to Iraq Zalmay Khalilzad also attended the meeting…

The most urgent reforms sought by the international donors are a hydrocarbons law that would outline ownership and foreign investment in Iraq’s oil reserves and a reduction of government’s subsidies.

An Iraqi parliamentary committee has been working on the hydrocarbons law. An August 31, 2006 article published in International Oil Daily entitled, “Iraqi Panel Hammers Away at Draft Oil Law” (no online link, sorry) provides some details:

Deputy Prime Minister Barham Salih, who heads the committee, said it has already resolved the issue of sharing oil revenues between the different regions of Iraq, but many other matters are still outstanding. These include the roles of the central and regional governments in managing reserves and production from fields that are currently not producing and the question of who will award lucrative oil contracts to foreign firms…

But leaders of the once-dominant Sunni Arab minority have voiced concern that the constitution, ratified in a referendum last year, could hand control of Iraq’s vast oil reserves to powerful new regional governments in the Shiite south and Kurdish north leaving their oil-poor areas in central Iraq with nothing…

The composition of the committee preparing the draft hydrocarbon law suggests that Sunni grievances and interests will not get much of a hearing, even though the issues under consideration are at the heart of power struggles between the different sectarian and ethnic groups in Iraq.

Two members of the committee have stood out so far: the Kurdistan regional government’s minister of natural resources Ashti Hawrami and Jabar Luaibi, the director general of South Oil Co.

Hawrami has been very active since his appointment earlier this year in drawing up an oil bill for the northern Kurdish region which gives the regional government extensive control over oil and gas fields independently of the central government in Baghdad…

Luaibi, a member of the majority Shiite community, has been instrumental in improving security in Shiite southern Iraq and ensuring uninterrupted exports from the region’s vast oil fields.

Salih, an influential figure in Kurdish politics, said the aim is to submit the draft law to parliament by the end of this year. Iraqi analysts expect to see clashes in parliament based on different interpretations of the constitution, especially on the vital issue of how to develop Iraq’s huge untapped oil reserves, most of which are located in southern Iraq.

According to an Associated Press report from September 10, 2006, Deputy Prime Minister Barham Salih (aka Barham Saleh) envisions the birth of what he calls a “Petro-Democracy” in Iraq.

Baghdad’s best hope for boosting its moribund oil output is working with major international companies in production-sharing deals, Iraq’s deputy prime minister said Sunday…

He spoke of Iraq emerging as a “secure petro-democracy”…

The deputy prime minister said he expected the law setting ground rules for managing Iraq’s huge petroleum reserves would be approved in parliament by year’s end.

“This will open Iraq’s oil sector for investment,” Saleh said. “We know what it takes. It takes partnerships with international oil companies.”

Big oil companies have told the U.S. government they are willing to send crews to Iraq to explore and pump oil — regardless of the violence — as long as there are legal ground rules for their participation, said U.S. Deputy Treasury Secretary Robert Kimmitt.

“The oil companies have told us they need to know what the rules of the road are,” said Kimmitt, President George W. Bush’s special envoy for the Iraq donor talks…

“Iraq needs investment. Iraq needs to send a strong signal to the international community about investment in oil,” the deputy prime minister said. “We need to push liberalization and open our markets.”

Asked about the most appropriate model of foreign investment for Iraq, Saleh advocated production-sharing agreements — known as PSAs. Under such arrangements, oil companies are typically granted a share of the crude they produce to offset their investments.

“I’m personally in favor of PSA agreements,” Saleh said.

For US officials and international oil companies, Saleh is sounding all the right notes when he speaks about PSA agreements, liberalization, etc.

But the crucial question regarding what Bush envoy Robert Kimmitt calls the “rules of the road” for oil investment concerns the explosive question of regional autonomy.

The committee drafting the hydrocarbons law is dominated by Shiite and Kurdish figures committed to regional control over the agreements dealing with the vast undeveloped fields that are currently not producing.

Is the US still committed to pushing for centralized national control over such agreements?

The Iraqi parliament recently voted to grant increased autonomy to regional federations. Kurds and the pro-autonomy Shiite coalition that dominates Parliament won a little help from some Sunni political figures to win passage of the plan.

“This is the beginning of the plan to divide Iraq,” said Adnan al-Dulaimi, leader of the Sunni National Accordance Front, which boycotted the vote along with the radical Shiite cleric Moktada Sadr’s party and the Shiite Fadila party. “We had hoped that the problems of sectarian violence would be resolved…”

If the Bush administration is still committed to “national unity”–including centralized control over the development of new oil fields–then this once again puts the US in an “objective” alliance with Moqtada Sadr and Ayatollah Mohammed al-Yacoubi, the religious leader of the Fadhila or Virtue party, based in the oil-rich southern Shiite city of Basra.

A US Alliance with Sadr and Yacoubi Against Regional Autonomy?

Given the enormous tensions between the US and the Shiite radicals among Sadrist and Fadhila forces, it hardly seems plausible to mention a US alliance with these figures.

Nevertheless, if the US wants to resist moves toward regional autonomy, then they will find allies in Sadr and Yacoubi.

Are there any signs of such an alliance?

The only such sign concerns Khalilzad’s press briefing reference to the urgency of setting a date for provincial elections.

In many provincial elections in the south, Sadr and Yacoubi will do very well. Khalilzad knows this; so do the Shiites.

Recent clashes in southern Iraq have pitted anti-autonomy Sadrist forces against the pro-autonomy SCIRI forces.

Is it possible that US pressure for provincial elections aims to empower the Sadrist forces as a bulwark against SCIRI’s autonomy moves?

The Sadrists certainly appear to be headed in that direction. An October 25 Associated Press report on the Shiite militia clashes in southern Iraq includes the following:

“There is a huge conspiracy supervised by the U.S. occupation to target the Sadrists,” said lawmaker Hassan Shanshal, a supporter of al-Sadr…

Looming ahead, however, is a battle the two sides will certainly fight–a contest over nationwide local elections for provincial councils.

The last vote in 2005… allowed SCIRI to take control of almost all of southern Iraq’s provincial councils as well as those in Baghdad. The Sadrists are eager to wrest away political hold on local government…

Al-Sadr, who has often derided his SCIRI rivals for their close ties to Iran, also is opposed to federalism…

“We will not be dragged into a fight,” said Nasser al-Saadi, a Sadrist lawmaker. “Instead, we will prepare for the elections and, when we take control of local governments, we will not allow federalism.”

The key question, then, is not how various Iraqi factions position themselves on the question of regional autonomy.

The most critical question is this: how do US factions position themselves on the question of regional autonomy and who is navigating the US ship of state?

Does the US support centralized control of Iraq, or regional autonomy?

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